Technical Analysis – JP225 cash index correction to gain pace with a new lower low
August 3, 2023 12:29 pm
The JP225 cash index is recording another decent red candle as it is trying to register a lower low. Since reaching the 2023 high of 34,006 on June 16, 2023, the JP225 index has been under significant bearish pressure. However, today’s move has finally broken the March 15, 2023 upward sloping trendline, potentially opening the door to a more sizeable pullback.
The momentum indicators have not been overly impressed by the recent price action with only the RSI dropping aggressively below its midpoint and thus pointing to an increased bearish tendency.The Average Directional Movement Index (ADX) is stuck well below its 25-threshold, signaling that the once-dominant bullish trend has ended, and that the market is experiencing a range-trading phase.
More interestingly, since early-July the stochastic oscillator has been edging higher, almost moving parallel to its moving average (MA). It has reached a crucial stage as it is now testing the support set by its MA. If the stochastic succeeds in breaking below its MA, it will be a strong bearish signal. On the flip side, another failure would be seen as a strong indication that the current downleg might lack the necessary strength.
Should the bears remain committed in further recuperating part of their losses, they would like to quickly clear the 23.6% Fibonacci retracement level of the March 8, 2022 – June 16, 2023 uptrend at 31,764, and then set their eyes on the 30,376-30,711 area. This range is populated by the February 16, 2021 high, the 38.2% Fibonacci retracement and the 100-day simple moving averages (SMA) respectively. Breaking this area appears to be very important from a momentum perspective.
On the other hand, the bulls are anxiously trying to prevent a more significant correction. They look ready to defend the 31,764 level and then push the index back above the March 15, 2023 trendline. They could then decide to have a go at the busy 32,300-32,624 range.
To sum up, the JP225 index bears have the chance of reversing the medium-term bullish trend if they manage to overcome some key support areas.
The JP225 cash index is recording another decent red candle as it is trying to register a lower low. Since reaching the 2023 high of 34,006 on June 16, 2023, the JP225 index has been under significant bearish pressure. However, today’s move has finally broken the March 15, 2023 upward sloping trendline, potentially opening the door to a more sizeable pullback.
The momentum indicators have not been overly impressed by the recent price action with only the RSI dropping aggressively below its midpoint and thus pointing to an increased bearish tendency.The Average Directional Movement Index (ADX) is stuck well below its 25-threshold, signaling that the once-dominant bullish trend has ended, and that the market is experiencing a range-trading phase.
More interestingly, since early-July the stochastic oscillator has been edging higher, almost moving parallel to its moving average (MA). It has reached a crucial stage as it is now testing the support set by its MA. If the stochastic succeeds in breaking below its MA, it will be a strong bearish signal. On the flip side, another failure would be seen as a strong indication that the current downleg might lack the necessary strength.
Should the bears remain committed in further recuperating part of their losses, they would like to quickly clear the 23.6% Fibonacci retracement level of the March 8, 2022 – June 16, 2023 uptrend at 31,764, and then set their eyes on the 30,376-30,711 area. This range is populated by the February 16, 2021 high, the 38.2% Fibonacci retracement and the 100-day simple moving averages (SMA) respectively. Breaking this area appears to be very important from a momentum perspective.
On the other hand, the bulls are anxiously trying to prevent a more significant correction. They look ready to defend the 31,764 level and then push the index back above the March 15, 2023 trendline. They could then decide to have a go at the busy 32,300-32,624 range.
To sum up, the JP225 index bears have the chance of reversing the medium-term bullish trend if they manage to overcome some key support areas.
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